Facilitating Payments

Who Allows Facilitating Payments?

Philip M. Nichols*

Abstract: “Facilitating payments” are bribes paid to secure routine, nondiscretionary acts from government officials. Although facilitating payments are illegal under local laws, the international regime does not require countries to criminalize the payment of these bribes abroad. This paper examines the guidance that Fortune 200 companies provide to their employees, agents and other associates with respect to facilitating payments. The paper finds that there are differences in how companies from different regions and different industry sectors approach the subject of facilitating payments. The paper offers possible explanations for these differences.

For the most part, both business actors and business regulators recognize the harmful nature of corruption. The trends in self-, domestic and international regulation are toward prohibiting corruption and limiting that harm. One notable exception exists, however, in this trend: some domestic and international regimes except facilitating payments from their prohibitions. 1. Corruption Corruption has become a much studied social artifact. Corruption possibly exists in many social situations, but can be roughly divided into public sector corruption, involving relationships which deal with governance of society, and private sector corruption, involving privately created relationships – usually business. Public sector corruption is the use or abuse of a public office or trust for personal rather than public benefit (Nye, 1967).1 This definition can manifest itself in several ways and is obviously subject to local idiosyncrasies. If, for example, in some polity it were not against the rules to cheat, lie and steal then a pubic bureaucrat who used a public office to cheat, lie and steal would not be considered corrupt. The core concept, however – the misuse of trust – seems to reflect a pancultural understanding of corruption (Heimann, 1994). Corruption expresses...